Estimating Human Capital Misallocation using a Panel Variable Coefficient Model with Varying Intercept and Slope

A panel variable coefficient model incorporating a varying intercept and slope is employed to estimate the aforementioned formula, and the outcome is subsequently integrated into equation (7) to derive the human capital misallocation indicator. The indicator is subjected to an absolute value transformation, whereby a higher magnitude signifies a more pronounced misallocation. Specifically, an improvement in the misallocation of human capital is inferred when the explanatory variable and the explained variable exhibit a negative association.